Cobb Theatres on S&PWatch,Pos;Regal Cinemas OutlkNeg.

NEW YORK--(BUSINESS WIRE)--June 12, 1997--NY--Standard & Poor's CreditWire 6/12/97 -- Standard & Poor's today has placed its double-`B'-minus corporate credit rating on Cobb Theatres L.L.C., and its double-`B'-minus rating on the $85 million senior secured debt jointly and severally issued by

The CreditWatch placement is based on Cobb's agreement to be acquired by Regal Cinemas Inc. for common stock valued at $100 million and the assumption of Cobb's $87 million of debt. The rating action reflects the likelihood that the Cobb debt rating will be equalized with Regal's upon completion of the deal, which is expected in July 1997.

Standard & Poor's has revised its outlook on Regal to negative from stable and has affirmed its double-`B'-plus corporate credit rating on the Knoxville, Tenn.-based company. The outlook revision is based on the increased financial risk associated with the addition of the Cobb debt as well as debt and cash used by Regal in other recent acquisition and expansion activity.

Despite its small size, Birmingham, Ala.-based Cobb has an attractive theater portfolio, with good positions mainly in Florida that complement Regal's strength in the Southeast. Cobb has a 9.6 ratio of screens to theaters, affording operating efficiencies that could improve further under combined management with Regal. However, Cobb has a higher risk financial profile, which will weaken Regal's key credit measures. Both Cobb and Regal have been actively expanding their respective theater holdings. Regal has frequently used equity in acquisitions, somewhat mitigating the financial risk impact. Nonetheless, the combined entity is likely to continue to require external financing.

OUTLOOK: Negative.

Maintenance of the rating relies on Regal's restoring key credit measures from the pro forma levels expected for 1997. In particular, Standard & Poor's expects the company to achieve 2.5 times (x) coverage of earnings before interest, taxes, depreciation, amortization, and operating lease rent, divided by interest expense plus operating lease rent in 1998. Failure to reach this level of coverage is likely to lead to a downgrade.

CONTACT: Heather M. Goodchild, 212-208-1606